The language in the Obamacare statute has always been crystal clear. Eligibility for the “affordability tax credit,” or subsidy, requires enrollment “through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Act.” Identical language appears in the definition of a “coverage month,” and every, single place subsidy eligibility is mentioned in the law.
States would, liberals assumed, all create state exchanges to get the money. It never occurred to them that some states would want to stop the subsidies and the employer taxes, 30-hour workweek, and associated penalties that come with them.
The only exception was eleven Democrats who were pretty sure their state would turn down the cash and warned: “In Texas, we know from experience that the dangers to the uninsured from greater State authority...millions of people will be left no better off than before Congress acted.”
The Congressional Research Service (CRS) wrote in April 2010, right after the law passed, that subsidy eligibility required “residing in a state that established an exchange,” but simply assumed: “Under PPACA, state-established ‘American Health Benefit Exchanges’ will have to be established in every state by January 1, 2014.”
But something funny happened on the way to those 50 state exchanges.
The American people rose up against Obamacare - ultimately resulting in one of the biggest landslide elections in history. They wanted the law repealed, but obstinate Senate Democrats refused to consider even modest changes. Most states, however, were in no mood to cooperate.
Rather than accept the verdict of the American people, the Obama administration turned to the IRS to come to Obamacare’s unlawful rescue. I say unlawful because CRS had issued a legal opinion on the matter, based on standard textualist principles of statutory construction: “An IRS interpretation that extended tax credits to those enrolled in federally facilitated exchanges would be contrary to clear congressional intent, receive no Chevron deference, and likely be deemed invalid.”
Yet the IRS, in a May 23, 2012 regulation, did extend subsidies.
Some states still didn’t believe it. At least three - Oklahoma, Alabama, and Indiana- cited the illegality of the IRS rule as a reason not to establish an exchange. They didn’t want the subsidies.
With lawsuits challenging the IRS rule moving through the courts, Obamacare had a problem. They were wrong on the facts and wrong on the law, so they pounded the table.
Foremost among them was Obamacare’s architect: Jonathan Gruber, the MIT economist who helped write the law. He relentlessly attacked the personal integrity of the honest men and women who put together the legal challenges to the IRS rule. He told the ultraliberal Mother Jones magazine in January 2013 that limiting subsidies to state exchanges was a “screwy interpretation.” of the law. “It’s nutty. It’s stupid,” he said, pounding that table hard. “They’re desperate.”
Well, somebody was.
“What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits,” Gruber himself explained in a January 2012 video found by Rich Weinstein.
“I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges.” And then, perhaps hedging that politics might trump the law, he added: “But, you know, once again the politics can get ugly around this.”
When he was caught, Gruber told the liberal New Republic the “statement was just a speak-o-you know, like a typo.”
Then more tapes emerged. In one he said: “Now, I guess I’m enough of a believer in democracy to think that when the voters in states see that by not setting up an exchange the politicians in a state are costing state residents hundreds of millions and billions of dollars that they’ll eventually throw the guys out, but I don’t know that for sure. And that is really the ultimate threat, is will people understand that gee, if your governor doesn’t set up an exchange, you’re losing hundreds of millions of dollars of tax credits to be delivered to your citizens.”
The Obamacare apologists of the left will somehow try to explain away the Gruber tapes. But no honest person should listen to them anymore.
Mr. Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at phil@americancommitment.org.